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[Sumitr Man]

Bobcat, on 2005-03-19 11:27:56, said:

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SECTION 113 OF THE LAND CODE
Any person who acquires land as an agent of an allien or juristic person under the provisions of Sections 97 or 98 shall be punished with a fine not exceed Bt. 20,000 or an imprisonment not exceeding 2 years, or both.


However, the above specifically applies to the use of nominees as shareholders in a limited company in order to make that company "Thai" for the purposes of buying land [S.97 & 98]. Whilst there is a school of thought that it also applies to individual nominees, it is questionable.

There has not to my knowledge ever been any court decision in Thailand stating that sections 97/98 of the Land Code apply to the use of nominees as shareholders.  

Sumitr Man - what is your source of information relating to the application of Section 97 and 98 of the Land Code to the nominee structure regularly used in Thailand?

Regards,
Bob

<{POST_SNAPBACK}>

Bob:

Section 97 of the Land Code, which I have in front of me, provides as follows:

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Section 97The following juristic persons may have the same rights in land as aliens:
(1) Limited companies with more than 49% of their capital owned by aliens, or more than half of whose shareholders are aliens, as the case may be;

For the purposes of (1), if any limited company issues bearer shares, such shares shall be deemed to be held by aliens;

(2) All limited partnerships or registered ordinary partnerships with more than 49% of their capital owned by aliens, or more than half of whose partners are aliens, as the case may be;
(3) Societies, including cooperatives, more than half of whose members are alien, or which operate especially or for the most part, in the interest of aliens;
(4) Foundations whose object is especially or for the most part in the interest of aliens;
(5) REPEALED.

Section 98 of the Land Code is a "chain-section", whereby it provides for a step prior to this step, and stipulates as follows:

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Section 98In the case of a juristic person in Section 97 becomes the owner of the capital, a shareholder, or a partner, as the case may be, in any other juristic person under the provisions of the preceding Section, such other juristic person shall be deemed an alien.

If you then read Section 113 of the Land Code, you'll clearly see that the use of "agent" in that section can be superimposed with nominee; thus, any Thai willing to act for an alien to avoid 97 or 98 would be subject to the penalties under 113.

On the issues of whether or not the Courts have ever ruled on this, I could not say.  Nonetheless, the law on this issue is clear, even if the practice is not.

SM  

[Sumitr Man]

Sorry, Bob:

On re-reading your post, if you're asking me what my authority is for say "Agent" = "nominee", you would need to refer to Section 797 of the Civil and Commercial Code of Thailand, which provides as follows:

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"Agency is a contract whereby a person, called the agent, has authority to act for another person, called the principal, and agrees so to act.

Agency may be express or implied.

Thus, IMO, if you pay money to establish a company in which you hold less than 50% and allow Thais to hold in excess of 51%, without their needing to inject any capital, you would have an implied agency relationship.  This situation would then become compounded in the event that you also required them to sign undated share transfer certificates - as is common practice here - as it would be clear that, as principal, you had control over your agent.

OTH, if the Thai injected theie own capital into the company, that could be evidenced as not being from you (i.e. you do not have a shareholders loan agreement or bank transfer), then clearly you would not have an agency relationship and all would be OK.  But how many situations do you know where a house is purchased in the name of a company in which Thais have invested over half the capital of their own money?  Not too many I bet  

SM  

[charles]

lopburi3, on 2005-03-19 18:21:30, said:

TizMe, on 2005-03-19 18:13:57, said:

She did get a new ID card when we were married, but she kept her Thai name. So I presume that when she transferred the titles they didn't think to ask the question "Is your husband a foreigner?"

<{POST_SNAPBACK}>

Suspect you are right and in that case it should not be any problem.  

<{POST_SNAPBACK}>

Under the law, I think there should have been a declaration made by the two of you.  As you say, the Land Office would not have been aware she was married to a foreigner.  Perhaps better keep it quiet if you sell as well!  So legally/technically it might cause some problems, how much this will be the case in practice I don't know.

Actually, from what I remember of reading the law, the need for declarations also applies to "marriages" where the marriage has not been registered, i.e. where Thai and foreigner are cohabiting as partners.  I'm sure Sumitr Man could clear this up...

[bkk_mike]

I would repeat what others have said.

Get a lease. Try and do the 30+30, but realise that the +30 is out the door if your brother-in-law dies in the first 30 years (unless you have a very good lawyer). i.e. It's fairly easy to get the renewal so that he is required to agree. But if he dies in the meantime, it's very difficult to get it so that the new owner is bound by a clause that they didn't sign.

Explain the lease to your sister as a way of getting them out of trouble. Since you'd then be working on land you've leased, rather than being perceived to work on land that doesn't belong to you. (and note that if that is deemed to be farming, labouring, etc. - you are actually breaking the law, as foreigners aren't allowed to farm without BoI exemption, or to do labouring work without a work permit, etc.)

i.e. Your brother-in-law, as owner of the land, could be perceived to have illegally employed a farang to do labouring work.


Admittedly, your brother-in-law might be trying to rip you off, but he could equally be telling the truth...


Do the lease - if he agrees, then he's not ripping you off, and as he'll have leased out the land, he's no longer responsible for what you do on it - so he'll be happy.

If he doesn't agree to the lease, unless someone knows a good reason for him not to agree (other than the obvious one - that he's ripping you off), walk away before you do any more work on it...


If you are being ripped off, remember in any dealings with the authorities that you do not own the land, that you never had any intention of owning the land (unless you want to get yourself chucked in jail). About all you can suggest is that you loaned the money to your brother-in-law for him to buy the land, and that he's now told you he's not paying you back. (i.e. You can get him into a bit of trouble with the land registry for stating the money didn't come from abroad, but that's about it. Non-repayment of a loan between brother-in-laws with no loan contract is unlikely to get him chucked in jail, but might make him lose face...)

[Sumitr Man]

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Non-repayment of a loan between brother-in-laws with no loan contract is unlikely to get him chucked in jail

Unlikely being exactly right!

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SECTION 653 Civil and Commerical Code:
A loan of money for a sum exceeding Bt.50 in capital is not enforceable by action unless there be some written evidence of the loan signed by the Borrower.

These days you have to get a loan contract signed just to lend someone enough to stand themselves a beer in the pub  

[Sumitr Man]

charles, on 2005-03-20 13:47:36, said:

...[deleted for ease]

Actually, from what I remember of reading the law, the need for declarations also applies to "marriages" where the marriage has not been registered, i.e. where Thai and foreigner are cohabiting as partners.  I'm sure Sumitr Man could clear this up...

<{POST_SNAPBACK}>

Charles:

From my reading, Thailand does not have the concept "common law" wife or cohabitee (with all the rights that go with such) in the same way as is the case in the West.

I'd freely admit to being wrong here, but my reading is based on Sections 1457 and 1458 of the CCC and Ajarn Wimolsiri Jamnarnwej's Family Law Of Thailand.

For your ease of reference, S. 1457 & 1458 read as follows:

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1457
Marriage under this Code shall be effected only on registration being made.

1458
A marriage can take place only if the man and woman agree to take each other as husband and wife, and such agreement must be declared publicly before the Registrar in order to have it recorded by the Registrar.

As cohabitees would not be legally married, I cannot see why there would be any need for the [foreign] man to sign a form saying he held no claim over the land unless he stood as guarantor and/or lender.  In which case, he may need to - but not as husband, but rather as guarantor/lender he would have to say he had no claim to reimbursement himself of any loss he may incur by taking action against the property.  Other than that, I think the situation would just be subject to normal Thai law.

As I say though, happy to be corrected - but I believe this to be the current position.

[pedro01]

Digger, on 2005-03-01 20:03:01, said:

Tornado, on 2005-03-01 19:08:48, said:

I dont think this will work out well at all. Im sorry you put so much trust into these people. I have heard thousands of stories of farangs getting ripped of in land deals, over the years.

I dont care about this being politically correct or not, but when any foreigner buys land in Thailand, use a Foreign Broker or Lawyer to do all of the due dilligance.
In my experience 99% of foreigners who have been in the business for at least 5 years (or reputable) will tell you everything you need to know, instead of, anything you ask about, if your using a Thai.

Yes, this is Thailand and people can say what they like, but a foreigner, will save you more money and headaches, if you use the right ones.

I hope it works out for you.

<{POST_SNAPBACK}>

With respect Tornado, I have come across more crooked farang 'developer wanabees' and 'land agents' than Thai one's.   Selling chanots without the land even being split is one of the prime examples, Upping the owner pirce is another very widespread practice invariably done by a farang.  The smooth Farang and his Thai 'lawyer' mate are some of the worst examples I have seen.  Granted a lot of this has happended in Chonburi but Phuket is just as bad - at least in Chonburi the chanots when they are granted are correct and legal.  Dealing with the absolute owner of the land is critical and never believe anything any intermediary be it Thai or farang says - speak it through with the owner, include it in the sale contract and be honourable. Most Thai landowners are VERY nervous of Thai and farang land agents as none of them have a good name.   Build the credibility with the owner and time after time of doing it I have never come unstuck.  Also very important to have a lawyer on your side that is highly regarded and LOCAL to the area.

<{POST_SNAPBACK}>

Thai or Farang - you need to find a law firm you can trust.

Always employ your own lawyer - never use the one recommended by the person you are doing business with.

[Bobcat]

Sumitr Man - In a properly documented transaction, a Thai person/entity who holds the majority of shares in a Thai company that owns land, even where the subscription monies have been loaned to that Thai person by the foreign partner and where a preference share structure has been used to give effective control of the company owning the land to the foreign party, would not be seen to be acting as an agent of the foreigner as such term is used in Section 797 of the CCC.  In a properly documented structure the Thai shareholder would have no authority, either express or implied, to act for the the foreign shareholder.  I have confirmation that this position is correct by several reputable law firms as well as high-ranking officials in the Land Department.

[Sumitr Man]

Bobcat -

I totally accept what you are saying.  As I may have mentioned, I'm not a lawyer, and I have no practical experience of these matters - only what I read. You on the other hand appear to have had practical experience in this matter; and as we all know, practical experience doesn't always reflect what we read  

That said, if I were a Thai involved in such a structure, I may well be asking you for an indemnity against any loss I may incur...  

SM  

Edited by Sumitr Man, 2005-03-22 17:46:57.

[Bobcat]

I agree with you Sumitr Man - a Thai shareholder in such a scenario may wish to ask for an indemnity - but as long as his/her/its shares are fully paid then there is no risk of liability.  Under Thai law, a shareholder is only liable up to an amount equal to his/her/its unpaid capital.  As long as the capital is fully paid, no problem.  However, as a matter of prudence, an indemnity is a good idea - although only of any worth if the person giving the indemnity is actually worth something.

[NedKelly]

There is a lot to be said about the word 'acceptance' ........ as with 'tolerance', 'acceptance' is important. We cant just rock up and start buying up land and developing it in Thailand. I am sure that inthe future there will be some sort of 'reaction' by locals against this type of thing. The Thai laws are there for a very good reason......imagine if there was no restrictions on foreign ownership here......land would be too expensive for a majority of local and expats alike. Have a look at real estate ads from Phuket....it's a complete joke......houses going for 50,000,000 baht and so on.

If you want to buy land and live on it or develop it then do it in a sensitive way........get to know the locals and once they accept you and yo ufeel comfortable then maybe raise the subject with the local headman.......then maybe you can feel justified in procuring land in Thailand. Of course this is in an ideal world. Reality is that many people wont be doing this. But they always say that you should live where u want to buy first so you know the area.

[wishfulthinking]

uh, beeing new also in the land buying business...

my husband (Thai) just bought land (with his money) and the land office didn't ask him to do any clearance, there is nothing on his id about being married to a farang. now, for future's sake, would it be a good idea to keep quiet or not?

[stevehaigh]

wishfulthinking, on 2005-04-21 19:22:06, said:

uh, beeing new also in the land buying business...

my husband (Thai) just bought land (with his money) and the land office didn't ask him to do any clearance, there is nothing on his id about being married to a farang. now, for future's sake, would it be a good idea to keep quiet or not?

<{POST_SNAPBACK}>

no problem for him but be aware that you have absoutely no claim to the land under any circumstances.

[wishfulthinking]

I'm very aware of that... now I've been considering of buying this land from him, practically by leasing it by this 30+30 year thing. Reading this forum plus other stuff on the net I find it very confusing as for what happens to the lease if we get divorced or if he dies before me and the renewal...

Me and his heirs are not in good terms, to add...